Independence Realty (IRT) Closes Acquisition of Trade Street
Independence Realty Trust, Inc. IRT has closed the acquisition of Trade Street Residential, Inc., thereby facilitating the creation of a regional market-focused, multifamily REIT.
Details of the Transaction
Per this cash-and-stock deal, for each outstanding share of Trade Street common stock, Independence Realty paid $3.80 in cash and 0.4108 shares of its common stock. In other words, the transaction involved Independence Realty paying around $139.8 million in cash as well as the issuance of approximately 15.1 million shares of common stock to previous Trade Street stockholders.
The merged entity will carry on trading under Independence Realty’s ticker symbol “IRT”. On a fully diluted basis, former Trade Street stockholders will own around 32% of the combined company, while legacy Independence Realty stockholders own approximately 68%.
The Benefits
The acquisition has helped Independence Realty increase its scale of operations significantly, enhance the quality of its portfolio and penetrate major regional markets.
In fact, as per the company’s revelations during second-quarter earnings announcement, the purchase of Trade Street would increase its property count to 50 from 31, marking a 55% uptick in units to 14,044. Moreover, Independence Realty’s average property age would reduce 20 years on the back of the addition of Trade’s Street’s high-quality Class A apartment communities. This certainly sounds encouraging for the company’s shareholders.
Moreover, the acquisition would not only expand the company’s geographic diversity into key regions in eight new markets and boost its presence in three existing markets, but also be accretive to 2016 core funds from operations (CFFO) and CFFO per share.
We believe that with the enhanced portfolio, Independence Realty has become well-placed to ride on the growth curve and improve shareholder value.
Independence Realty currently has a Zacks Rank #3 (Hold). Investors interested in REITs may consider stocks like Armada Hoffler Properties, Inc. AHH, Camden Property Trust CPT and Equity LifeStyle Properties, Inc. ELS. All these stocks hold a Zacks Rank #2 (Buy).
Note: FFO, a widely accepted and reported measure of the performance of REITs, is derived by adding depreciation, amortization and other non-cash expenses to net income.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
EQUITY LIFESTYL (ELS): Free Stock Analysis Report
CAMDEN PPTY TR (CPT): Free Stock Analysis Report
ARMADA HOFFLER (AHH): Free Stock Analysis Report
INDEP REALTY TR (IRT): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
